Quotas introduced as part of the EU’s F-Gas regulation will remain in place regardless of the final direction of Brexit, the Department for Environment, Food and Rural Affairs (Defra) has said in a policy update.

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Commitments from key banking groups seek to address concerns about ongoing financial viability of contractors that have lost work or money in construction giant’s collapse

Business secretary Greg Clark has welcomed commitments from several banks to support small businesses facing financial difficulties as a result of the collapse of Carillion earlier this week as specialist contractors seek to assess longer-term impacts on their operations.

Following a government meeting with UK banking groups, Mr Clark said several groups were now providing over £200m in combined funding that has been earmarked to support the construction supply chain. HSBC has pledged £100m, RBS is offering £75m in assistance and Lloyds Banking Group has set aside a fund of £50m.

The assistance announcement followed a pledge by HM Revenue and Customs (HMRC) to provide a number of special measures to contractors, such as suspending debt collection proceedings and reviewing penalties for missing deadlines on tax payments for firms affected by Carillion’s collapse.

The full financial impacts and potential losses within the supply chain are still being considered by industry, as well as the impacts on retaining skills and competence in construction and building service work. Key construction industry bodies have warned that many contractors face an uphill battle to recover funds held in retention or still owed by Carillion before its collapse. These same organisations have reiterated calls for the government to enact payment reforms for building service work as a means to protect against further industry upheaval.

“Slim chance”

Rudi Klein, chief executive of specialist contractors’ body the SEC Group, said the financial support unveiled by the banks was seemingly intended to assist with firms and contractors that may find themselves in a “serious situation” as a result of Carillion’s liquidation.

However, he warned that there was presently a “slim chance” that contractors owed retentions cash or funds up to the liquidation announcement at 7:00am on Monday would be able to recover funds as the liquidator looks to settle debts with creditors.

Professor Klein said that by the end of the first working week since Carillion’s liquidation, every firm that has worked with the organisation was still processing where they stand financially and with regard to future work.

Professor Klein recommended any creditors or organisations that worked with group should to go to PwC’s website with regards to getting updated information on the liquidation process and potential work.

He added, “By now, PwC is saying they have been in contact with all sub-contractors to understand their obligations, with most construction projects still closed or paused”

SEC Group said it was urging companies with any equipment or materials they own still kept on sites to register their claims with PwC.

Professor Klein added that some clients have been attempting to step into Carillion’s shoes to take over certain maintenance contracts. This builds on government pledge to maintain payments for the group’s public service contracts, which amount to just under 40 per cent of the group’s 2016 revenues.

He said that with talks ongoing about the future of Carillion’s private construction projects, specialist contractors should avoid trying to increase their exposure at the present time for work they are not being paid for.

Any offers for work should be met with a guarantee and timeline for payment either from PwC or the Official Receiver, said Professor Klein.

Next steps

Industry bodies Build UK and the Civil Engineering Contractors Association (CECA), whose members represent companies who deliver the overwhelming majority of building and infrastructure construction activity in the UK, have meanwhile proposed four distinct steps in a bid to mitigate the consequences of the collapse.

The jobs of 19,500 workers in the UK at risk and an estimated 25,000-30,000 businesses owed money for work carried out for Carillion, according to Build UK.

CECA Chief Executive Alasdair Reisner said: “Urgent steps must be taken to support Carillion’s workers and suppliers. We believe that government and industry must work together to mitigate effects of the company’s liquidation, and ensure the thousands of capable staff are able to remain in our industry. Government and industry must closely co-operate to protect the wider UK construction industry and its supply chain, which is a key driver of economic growth.”

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RAC Magazine is the leading source of news, information and analysis for the refrigeration and air conditioning industry. For over a century, RAC has provided decision makers with unrivalled coverage of the latest technical innovations that drive this sector.